The asylum and immigration agency has been “unable to perform even a basic level of administration”, an ombudsman’s report has warned.

The UK Border Agency (UKBA) provides “very poor customer service” and has repeatedly failed to read and reply to letters, keep proper records, keep case files together, and notify applicants of decisions, the parliamentary ombudsman said yesterday in a report into complaints.

In one example, a ‘Mr P’ had been granted indefinite leave to remain in 1990 and, in 2004, applied for a ‘No Time Limit’ stamp to be placed on a new passport. The agency refused the request because it had no record of his leave to remain, and Mr P had to make a fresh application for permission to stay in the country.

This was refused in 2005, and he was told he might have to leave the UK. It was only when he applied again in 2007 for leave to remain that the agency located the original, 1990 Home Office papers.

The agency has been struggling with a historic backlog of almost half a million unresolved asylum cases since it was set up in 2008. Parliamentary ombudsman Ann Abraham said: “The administrative muddle created from this legacy backlog has had a serious impact on many thousands of asylum applicants.”

The agency says it is on target to clear the asylum backlog by summer 2011, and Abraham has praised UKBA for making “significant progress in recent years”; but her report warns that there has been a knock on effect on other application systems, including a 77,000-strong backlog in applications from European residents.

Abraham said this new backlog had developed after 140 European applications officials were moved in March 2008 to work on the removal of foreign national prisoners. By August 2009, almost 39,000 European applications had missed the statutory six-month deadline for a decision, the ombudsman said.

Despite a new case management system introduced in 2007, the National Audit Office warned two years later that there was a risk of new backlogs developing.

The agency must also begin this year to review the cases of anyone granted asylum since 2005, when the system was changed from granting indefinite to five-year leave. The report said that UKBA has not kept track of those asylum seekers.

The ombudsman said the UKBA generates “a large number of complaints” to the ombudsman, both in terms of volume – 478 in the first nine months of 2009-10 – and the number upheld.

Abraham said there was evidence of some improvement in complaints handling; an acknowledgement which has been welcomed by Lin Homer, the agency’s chief executive.

Homer also pointed out that the agency has already cleared 235,000 legacy cases since 2006, when it introduced a five-year plan to clear the 450,000 backlog of cases which had developed following a Europe-wide peak in asylum applications.